Why Did Mike Ullman Decide to Change the Age-Old Culture at Jc Penney (Jcp) Just After a Successful Turnaround?

Why did Mike Ullman decide to change the age-old culture at JC Penney (JCP) just after a successful turnaround?

JCP was originated by a dry goods and clothing store in 1902. In 1907, Penney bought the stakes of his partners and concentrated on expanding the number of stores. The JC Penney Company was incorporated in 1924 and it had been running successfully. Until 1990s, the expansion model had started to show up problems. When competitors were going in for centralized merchandising and inventory systems, JCP was still using a decentralized system of purchasing which resulted in stretched out lead times. JCP was no longer perceived as different from its competitors. Its financials and share prices also plummeted.

Luckily, between 1999 and 2004, there was a turnaround in JCP. It was orchestrated by Castagna and Questrom, who joined JCP as COO in 1999 and as Chairman and CEO in 2000 respectively. They were the first outsiders to join JCP in their respective positions. Turnaround occurred in aspects below:

1. To centralize the buying activities and revamp the stores, funds were needed. The funds were raised through the sale of JCP’s Direct Marketing Services (DMS), which sold insurance and travel and auto club programs. It led to significant working-capital improvement.

2. JCP has also closed down 120 outlets that were not performing well. It generated an increase in free cash flow.

3. Ad campaigns were launched and the stores were given a face-lift. New designers were brought in from the competitors. JCP also dealt with apparel makers like Bisou Bisou, to exclusively sell its merchandise at JCP. It also came out with private labels like The Havanera Co., range of men’s contemporary casuals targeted at Hispanic males. JCP has made significant efforts to project a fashionable image of the company to target audience.

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
x|ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934|
For the fiscal year ended January 29, 2011
or
¨|TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934|
For the transition period from to
Commission file number 001-15274
J. C. PENNEY COMPANY, INC.
(Exact name of registrant as specified in its charter)
| | |
Delaware| |26-0037077|
(State or other jurisdiction ofincorporation or organization)| |(I.R.S. EmployerIdentification No.)|
6501 Legacy Drive, Plano, Texas 75024-3698
(Address of principal executive offices)
(Zip Code)
(972) 431-1000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| | |
Title of each class| |Name of each exchange on which registered|
Common Stock of 50 cents par value| |New York Stock Exchange|
Preferred Stock Purchase Rights| |New York Stock Exchange|
Securities registered pursuant to section 12(g) of the Act:
None
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨
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By
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Major Department: Apparel, Design, and Hospitality Management
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Title
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By
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The Supervisory Committee certifies that this disquisition complies with North Dakota State
University’s regulations and meets the accepted standards for the degree of
MASTER OF SCIENCE
SUPERVISORY COMMITTEE:
Linda Manikowske
Chair
Holly Bastow-Shoop
Jaeha Lee
Gerry Macintosh
Approved:
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1. I feel J.C. Penney’s strategy is to do with away constant “sales” and have every day lower prices. I also feel that Penney’s will favor the promotion of brand names and doing away with in-house labels.
2. Yes I think Penney’s has a good strategy for growth. The new CEO Ron Johnson is providing direction and encouraging new ideas. By using the “apple” model for Penney’s he is incorporating new ideas. Mr. Johnson is trying to develop a competitive advantage by changing the way Penney’s does business. His ideas are innovative and are being responsive to customers. Finally by offering brand names he is promoting quality over cheaper in-house labels.
3. Ron Johnson has established the mission and vision with his vision on how Penney’s needs to change to become competitive. He has established the grand strategy by assessing Penney’s current performance and lays out the game plan on how the mission will be accomplished. Mr. Johnson has clearly formulated his strategy by analyzing Penney’s internal problems along with the problems they have are facing from their competitors. Penney’s is currently n the strategy implementation part of the process this will take much investment but cost cutting and the elimination of sales......

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Table of Contents
Introduction 3
Background 5
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JC Penney was a thriving retailer business that played on consumer’s emotions and made a consumer feel proud of themselves. JC Penney as a retailer created a buzz about themselves with their pricing strategy and coupons that they offered to their consumers. Consumers often discuss the sales and the great price of a sale of items amongst themselves. This was definitely a strength for this retailer. JC Penney was also a great place to shop for big and tall in a concrete building and store, not a catalog that was another appeal to their consumers. J.C. Penney was using a decentralized system of purchasing merchandise and inventory while other companies began to use centralize systems. To centralize the buying activities and revamp the stores, funds were needed. Funds were raised through the sale of JCP’s Direct Marketing Services, which sold insurance and travel and auto club programs. It led to a significant improvement of cash flow. The company then began to close down 120 of outlet stores that were under performing and sold its interest Eckerd drugstore chain to improve an influx of cash flow.
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